RBI curbs to render Paytm wallet and FASTag inoperative.

Syllabus: GS-III

Subject: Economy

Topic: Banking and Financial Intermediaries

Issue: Payments Banks

Context: The Reserve Bank of India (RBI) imposed curbs on Paytm Payments Bank Ltd(PPBL).

  • PPBL has been barred from.
    1. Taking further deposits or undertaking credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags.
  • Reasons for actions: Persistent non-compliances and continued material supervisory concerns in the bank.
  • However, customers are free to withdraw or use their balances in these accounts without restrictions.
  • RBI issued orders under Section 35A of the Banking Regulation Act,1949 which gives powers to issue directions on public interest/interest of banking policy.
Payments Banks:

Introduced to promote financial inclusion by offering services to the unbanked and underbanked population, particularly in rural areas.

Features:

●     Basic banking services like bill payments, money transfers, mobile banking, and ATM/debit cards.

●     Limited deposit amounts: Can accept deposits of up to ₹2 lakh per customer.

●     No credit facilities:Cannot offer loans or credit cards.

●     Regulation:

○     Registered as a public limited company under the Companies Act, 2013.

○     Regulated under the relevant provisions of the Banking Regulation Act, 1949; RBI Act, 1934 and Payment and Settlement Systems Act, 2007.

 

 

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